The Indian government has launched a Carbon Credit Trading Scheme (CCTS) targeting greenhouse gas (GHG) emissions intensity in eight energy-intensive sectors, including steel and aluminum. This scheme, implemented under the 2023 Energy Conservation (Amendment) Act, aims to reduce emissions by rewarding organizations that exceed set targets with marketable carbon credit certificates. Companies that do not meet the criteria can either purchase credits or face penalties.
Despite the scheme’s intentions, reviews of previous cycles reveal mixed outcomes. The current CCTS targets a mere 1.68% annual reduction in emissions intensity from 2023 to 2027, which is less ambitious than the projected industry-wide decline of 2.53%. This shortfall raises concerns about whether the targets align with India’s 2030 Nationally Determined Contributions (NDCs) and long-term net-zero goals.
Additionally, key sectors such as power, transport, and agriculture are excluded from the scheme, limiting its overall effectiveness. Critics suggest shifting focus to a broader economic evaluation rather than just sector-level compliance. Experts advocate for progressively tightening targets, expanding sector coverage, adopting best practices for monitoring, and aligning CCTS trajectories with national decarbonization commitments to enhance its impact on India’s sustainability goals.
